Who can or cannot claim the Employment Allowance

Source: HM Revenue & Customs | | 05/12/2018

The Employment Allowance of £3,000 per year is available to most businesses and charities to be offset against their employers Class 1 NIC bill. The allowance can be claimed as part of the normal payroll process.

An employer can claim less than the maximum if this will cover their total Class 1 NIC bill. Eligible employers that have not yet done so can still claim for the current tax year (as well as make a backdated claim for one further tax year).

The eligibility to claim the Employment Allowance was removed for limited companies with a single director and no other employees in April 2016. As the allowance was introduced as an inventive to take on staff, it was felt unfair that companies with a single
director and no employees should benefit from the allowance.

There are a number of other excluded categories where employers cannot claim the Employment Allowance.

These include:

Persons employed for personal, household or domestic work, such as a nanny or au pair (unless they are a care or support worker);

a public body or business doing more than half their work in the public sector;

a service company working under ‘IR35 rules’ and your only income is the earnings of the intermediary.